Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. The
Speaker 1: history of counting the beans of any economy starts with
Speaker 1: Leon Thief and Tenberg and back around the vicinity of
Speaker 1: World War Two on. From that was a giant of
Speaker 1: economics of Pennsylvania, Lawrence Klein. He's the one that invented
Speaker 1: how we figure out what the U. S economy is doing.
Speaker 1: He was the first doctoral candidate of the giant, Paul Samuelson.
Speaker 1: It devolves down many years later to the blue Chip
Speaker 1: Award Allen Zennor. Morgan Stanley did something extraordinary, put together
Speaker 1: four years of data at Morgan Stanley and did it
Speaker 1: with the smallest standard error in twenty years. Now joining us,
Speaker 1: she walks on water from Morgan Stanley. How did you
Speaker 1: do it? What? What do you do to walk on water? Thanks? Tom.
Speaker 1: I think part of it is when you're in a
Speaker 1: large organization like Morgan Stanley, you have the benefit of
Speaker 1: global strategists covering every asset class of global economists in
Speaker 1: every region and coming together in that mind sharing and
Speaker 1: being sure that all those beans at up is part
Speaker 1: of the process that helps what we call keeping it honest?
Speaker 1: Did I and to Jim Garman, and can I say
Speaker 1: this and tell me if I'm wrong? And what Steve
Speaker 1: Roach wrought with Richard Burney years ago was you people
Speaker 1: argue like I mean, it goes back and forth. It's
Speaker 1: a very constructively argumentative process. And it is so it is, Yeah,
Speaker 1: and I would describe it as constructive. I mean, sometimes
Speaker 1: it can feel like arguing, but it's it's feedback. It's
Speaker 1: pushed back. And that's really important because a is uh.
Speaker 1: You take it, you listen to it, You make sure
Speaker 1: that you're looking at it in the way that this
Speaker 1: person is presenting to you. And so at least when
Speaker 1: you go out with a forecast, you go out with
Speaker 1: extremely strong conviction. I never could have stuck to our
Speaker 1: one hype call in twenty fifteen or one hYP call
Speaker 1: in tween um if I didn't have that debate to
Speaker 1: be darn sure that I felt convicted about that view.
Speaker 1: Do people actually the first of all, congratulations on the
Speaker 1: award but do people um debate enough? So maybe in
Speaker 1: your organization they do. But are people kind of vocal
Speaker 1: um our policymakers vocal enough and do they exchange views enough? Well?
Speaker 1: I think it's a it's a is an absolutely great question.
Speaker 1: I mean, if you talk to Don Cone, the former
Speaker 1: vice chair of the f O m C, uh, you know,
Speaker 1: he is one of those that will lament over the
Speaker 1: day that the Sunshine Act was put in place where
Speaker 1: they released transcripts with only a five year lag Now
Speaker 1: five years sounds like a lot um, but five years.
Speaker 1: Most board governors have fourteen year terms. Uh. And so
Speaker 1: he said, after that was put in place, what had
Speaker 1: been very open, robust debate at the table in the
Speaker 1: boardroom at the f O m C was everyone would
Speaker 1: come in with prepared marks and you would go around
Speaker 1: the table and read your prepared marks on how you
Speaker 1: felt about the economy and monetary policy and then say next,
Speaker 1: and the next person would go on. And it really
Speaker 1: tamped down open debate and discussion at those meetings. That said. Uh,
Speaker 1: something that certainly Cherry Yelling stuck to when she was
Speaker 1: ahead of the f O m C was that she
Speaker 1: would have those conversations offline ahead of time before the
Speaker 1: meeting by phone. Um so that those debates did not
Speaker 1: take place when where the transcripts would pick them up.
Speaker 1: Um So, I don't think it tamped it down completely.
Speaker 1: But um yeah, much of it plays out on the
Speaker 1: on the global stage as they're speaking publicly now whereas
Speaker 1: it was never that way before. But but if you
Speaker 1: look at the bo E, it's the Bank of England,
Speaker 1: it's very different to what, of course, you know, how
Speaker 1: the FED does it. It's um is there a right
Speaker 1: or wrong way? And and does that go back to
Speaker 1: just market functioning. If you have too many transparent and
Speaker 1: you know, open debates in the public, do you have
Speaker 1: a higher chance of the market miscommunicating on misunderstanding. Yes,
Speaker 1: I think I think there is that that chance all right,
Speaker 1: because you've got many voices. I remember the the common
Speaker 1: complaint from clients of ours. After Bernanke took over the FED,
Speaker 1: the first truly academic leader of the FED, and he
Speaker 1: instilled his a blue sky thinking where everyone had a say,
Speaker 1: and he encouraged everyone to speak publicly. You know that
Speaker 1: certainly men, especially if I traveled outside of the US,
Speaker 1: clients would say, who in the heck? Do I listen
Speaker 1: to I used only listen to one man. Now they
Speaker 1: let's listen to one man roller tape if you would.
Speaker 1: Right now, here's the president, a central banker. My biggest
Speaker 1: threat is the FED because the FED is raising rates
Speaker 1: too fast and it's independent. So I don't speak to him.
Speaker 1: But I'm not happy with what he's doing because it's
Speaker 1: going to fist the president United States. Trish rig And
Speaker 1: dashing out with their new show over at Fox. But
Speaker 1: it's good to see that ell and there's the there's
Speaker 1: the president right now threatening FED independence. Everybody agrees on
Speaker 1: this as well. Let's back up to the call that
Speaker 1: made you famous, which you have the courage to go
Speaker 1: out and say no, it'll be slower. Bring that call
Speaker 1: up to date, and what a FED call into two
Speaker 1: thousand nineteen looks at. Do you still have a house
Speaker 1: cautious call? Yeah, I think compared to consensus, we're still
Speaker 1: on the more cautious side. Um. Absolutely no reason for
Speaker 1: them to stop hiking right now, and they are completely
Speaker 1: convicted around this next year. The butt is that going
Speaker 1: in the next year, they're completely divided between do they
Speaker 1: deliver two, three, or four hikes? And that's because the
Speaker 1: risks have risen as we go into next year. Now,
Speaker 1: they're upside risk of financial conditions stay easy, they're downside
Speaker 1: risk of trade e M other international spillovers. We're talking
Speaker 1: about bregsit today. UH. You know those are are very
Speaker 1: real downside risk to the outlook as well. UH. And
Speaker 1: so I think we should recognize that while the median
Speaker 1: dot UH is at three hikes for next year, for
Speaker 1: the f MC, it's it's not as hard dot as
Speaker 1: I would call it. Right, They're completely divided. Uh. And
Speaker 1: so I don't expect them to have any more clear
Speaker 1: clarity by the December meeting on how many times they
Speaker 1: should really hike next year. We think they will hike
Speaker 1: twice through June. We think by the time they come
Speaker 1: into that September meeting to debate whether they should hike
Speaker 1: again or not, the shape of growth UH, if our
Speaker 1: forecasts hold true, will show that the economy is slowing
Speaker 1: back towards two percent. This is the other side of
Speaker 1: fiscal stimulus when that stimulus fades, uh, and that that's
Speaker 1: gonna be evidence that they must be around neutral. And
Speaker 1: then enough of them will say let's pause here and
Speaker 1: take a look around before deciding whether we need to
Speaker 1: be restrictive. That's how we think it will play out.
Speaker 1: That is less than what consensus is is thinking though
Speaker 1: for hikes next year. Alright, thanks so much. Ellen sent there.
Speaker 1: They're off. Morgan Stan joining us now the former Ambassador
Speaker 1: of the United States to Israel, Martin Indick, who has
Speaker 1: had an exceptionally productive career in foreign policy and service
Speaker 1: to our National Security Council, working at Brookings and now
Speaker 1: with a Council on Foreign Relations. Ambassador, we are thrilled
Speaker 1: to have you with us today. What would you expect
Speaker 1: Mr Urwan will do after Riad and after the Secretary's
Speaker 1: visit to Anchor? Oh, what is next for Turkey? Welcome morning, Tom,
Speaker 1: Thanks very much for having me on the program. U
Speaker 1: Urdwan is in the bazaar and he has some important
Speaker 1: good to sell. He's trickling out to the press. The
Speaker 1: Wall Street Journal has details of morning gruesome details of
Speaker 1: the audio recordings that are in the Turkish government's possession.
Speaker 1: What is he looking for is anybody's guests. But but
Speaker 1: you would know as well as I that the Turkish
Speaker 1: lira has been struggling, that the Turkish economy is in trouble.
Speaker 1: The Trump double the tariffs on Turkeys steel, and so
Speaker 1: I think he's looking for relief in all of these
Speaker 1: respects from some Saudi perhaps Saudi financial support, some relief
Speaker 1: from Trump. After all, he released the evangelical pasta the
Speaker 1: Trump was hoping for right before the midterm elections here,
Speaker 1: so he's positioned himself very well to uh get some payoffs. Ambassador.
Speaker 1: One of the great things we've seen here is the
Speaker 1: use of sanctions. Jack Lewis with yesterday the former Secretary
Speaker 1: of Treasury talking about the non efficacy of sanctions. What
Speaker 1: does Martin Index think of the use of sanctions by
Speaker 1: this administration or frankly by other nations as well, well?
Speaker 1: Uh In, In general, sanctions have become more effective, uh
Speaker 1: more recently because the Treasury, particularly under Jack lu was
Speaker 1: quite quite effective in tightening the financial sanctions. Because the
Speaker 1: United States dominates the financial factor, particularly issues entertainments, it
Speaker 1: can hurt businesses that that ignore American sanctions. And so
Speaker 1: I think they've become effect more effective over time. Now
Speaker 1: we're going to have an early test case of that
Speaker 1: proposition on November four when the United States imposes reimposes
Speaker 1: oil sanctions on Iran, and we will see how many
Speaker 1: countries decide to find alternative sources, and then the question
Speaker 1: of courses where they can find alternative sources of reasonable prices.
Speaker 1: The big ones to watch China and India because they're
Speaker 1: the biggest importers of oil from Iran. But this crisis
Speaker 1: with Saudi Arabia comes at a moment when the efficacy
Speaker 1: are those actions will depend on Saudi Arabia making up
Speaker 1: the shortage in supply that comes from taking Iranian oil
Speaker 1: off the markets. If the Assaudis don't do that, then
Speaker 1: the price of war is going to spike, not only
Speaker 1: giving the Saudis a revenue win for but also helping
Speaker 1: the Iranians because they'll be able to discount their royal
Speaker 1: significantly and still be able to sell it in those circumstances.
Speaker 1: So Martin, essentially the approach towards Iran does it complicate
Speaker 1: the United States ability to confront Saudi Arabia, even if
Speaker 1: they wanted to completely. It's it's the thing that we
Speaker 1: will always need to take into account here is that
Speaker 1: Saudi Arabia, together with Israel, are the two pillars of
Speaker 1: Trump's anti Iranian policy. They are critical partners in this
Speaker 1: effort um not normally partners, but Saudi Arabia and Israel
Speaker 1: have a common concern about Iranian hegemonic efforts in the region.
Speaker 1: So right at the moment when Trump is trying to
Speaker 1: impose maximum pressure on the Iranians, Saudi Arabia has gone wobbly,
Speaker 1: and there's likely to be a continuing kind of crisis
Speaker 1: between the United States and Saudi Arabia, not because of Trump,
Speaker 1: but because the Senator of the United States is really
Speaker 1: upset with what the Crown Tranter Saudi Arabia is alleged
Speaker 1: to have done with this American resident journalist. And and
Speaker 1: so this is a train which is heading for a
Speaker 1: train crash, and it's very hard for Trump and Secretary
Speaker 1: of State Pompeo to put the brakes on it. So
Speaker 1: one beast, I would love it if for our audience
Speaker 1: you could lift the lid on how international diplomacy works
Speaker 1: at a time like this. All we have to go
Speaker 1: on right now is the official line from the Secretary
Speaker 1: of State Mr. Pompeo, and anything that he says releases
Speaker 1: about conversations with Saudi Arabia. What's happening in the background
Speaker 1: right now with the officials from Turkey, Saudi Arabia, the
Speaker 1: United States tell us what we don't know. How does
Speaker 1: this work the industry of diplomacy right, So, so what
Speaker 1: you saw was the quick dispatch of Pompeio first of
Speaker 1: all to read and then to anchor. That tells us
Speaker 1: that he is trying to put this crisis back in
Speaker 1: the box by working out understandings with the Crown Prince
Speaker 1: of Saudi Arabia and the President of Turkey. That's the
Speaker 1: heart of his mission. It is not made easier as
Speaker 1: usual by by President Trump, who has no discipline in
Speaker 1: this matter. He should be off the tweet waves, that
Speaker 1: he should be off the airways so that Pompeo can
Speaker 1: try to do his job and try to put together
Speaker 1: what he calls for, which is publicly which is a
Speaker 1: thorough investigation on the one hand, and the Saudis have
Speaker 1: committed to that, and on the other hand, to try
Speaker 1: and get the Turks to stop leaking to the press,
Speaker 1: which undermines the whole effort. Mr Ambassador, you have stated
Speaker 1: that this is the first real crisis that Mr Trump faces.
Speaker 1: What does his team need to do to explain to
Speaker 1: him this is the real, first crisis that he faces. Well,
Speaker 1: I think they need to walk him through the way
Speaker 1: in which this can unravel his whole strategy towards Iran
Speaker 1: and as well as cause cause turmoil in the oil markets,
Speaker 1: especially if if there's a challenge to the Crown Prince
Speaker 1: of Saudi Arabia's leadership from other royals in the family
Speaker 1: in Saudi Arabia. They need to make him understand the
Speaker 1: gravity of the situation and therefore the importance of discipline,
Speaker 1: thing that he seems incapable of holding. Two because in
Speaker 1: a crisis, every message has to be carefully controlled. This
Speaker 1: is not about a mid Ton Elections are about getting
Speaker 1: a judge confront. It's it's about uh international consequences in
Speaker 1: which things can spin out of control quite easily. Ambassador,
Speaker 1: thank you so much. Martin Indek with the Council and
Speaker 1: Foreign Relations, the former United States Ambassador to Israel. I'm
Speaker 1: so excited our guest. I'm gonna let you bring him
Speaker 1: in because he's incredible with finance. He has one of
Speaker 1: the ten greatest tweets ever on uber rides It's ever
Speaker 1: in New York City. Was clearly drinking whiskey and refused
Speaker 1: to share. He's the only one who gets to drown
Speaker 1: out his depression on a Wednesday morning. That's one of
Speaker 1: the ten best tweets ever. Somebody keeps track of this stuff. Interestingly,
Speaker 1: I don't rank him, No, the article ranked him for him.
Speaker 1: There's some hilarious ones. Joe Nevington joins the snap blombog
Speaker 1: intelligence credit and strategy analysts. Do you have a word?
Speaker 1: Super nightmare? Now everything is always pleasant and happy in
Speaker 1: an ubercar. Let's talk about it. Come to market. Tell
Speaker 1: me what they would come into market with, what they
Speaker 1: upsize it to, and just how big the order book is? Sure, Yeah,
Speaker 1: I know it's a big it's a big deal. They came.
Speaker 1: They're issuing two bonds, a five year and an eight year.
Speaker 1: Looks like the five years and being priced at seven
Speaker 1: and a half percent and the eight year at eight percent,
Speaker 1: and that to me looks uh. Particularly the eight year
Speaker 1: looks tight relative topic year. That's like high yield junk
Speaker 1: junk junk, right, it is junk junk junk. It's it's
Speaker 1: it's expected to get junk junk junk ratings B minus
Speaker 1: and be three at Moody's. What does that mean to
Speaker 1: the two mere mortals like me that don't memorize are
Speaker 1: below triple A. Sure, it means that junk. It means
Speaker 1: that it's one notch slightly higher than the triple C category,
Speaker 1: which is viewed as having a one in three chance
Speaker 1: of bank bankruptcy within a year. Let me stop your folks.
Speaker 1: What you just heard from Mr Levinson is so important, John,
Speaker 1: Uber is rated one notch above triple C, and yet
Speaker 1: it's the greatest company since time began. We have very
Speaker 1: believe I've never heard this. But what I think is
Speaker 1: interesting about this if we say this from Netflix, and
Speaker 1: we saw this from Testa last year as well, you
Speaker 1: can have the attractiveness of the equity somehow reflected in
Speaker 1: the debt, which makes no sense because the upside is
Speaker 1: going to be in the equity and not in the debt.
Speaker 1: But for some reason, the attractiveness of taking a slice
Speaker 1: of equity turns up in the bond market. Why does
Speaker 1: that happen? John? Why is that happening? It happens all
Speaker 1: the time, John. I you know, like as a young
Speaker 1: credit analyst years and years ago. You know, if we
Speaker 1: go back like twenty years, one of the first job
Speaker 1: that I looked at was long term capital management, and
Speaker 1: it was the same exact worked out that worked out
Speaker 1: really well. Luckily for us, we weren't involved in it,
Speaker 1: but it's the same thing. People see the growth and
Speaker 1: the opportunity and they failed to look at the risks,
Speaker 1: and that's what credit is supposed to be about. So
Speaker 1: quality is really interesting to me right now. High yield
Speaker 1: and I don't know if you saw this this morning,
Speaker 1: Tom JP Morgan pointing out junk bond issuance is on
Speaker 1: course to be the lowest this year since two thousand
Speaker 1: and nine. It's basically going to come in a hundred
Speaker 1: and fifty five billion dollars yet to date so far,
Speaker 1: and that's really important. Supply shortage in this space and
Speaker 1: the seven percent paper, Where do they pay that interest coupon?
Speaker 1: When you clip your Uber coupon in the back of
Speaker 1: your lift vehicle and mail off the coupon or take
Speaker 1: it down to the broker, it just comes out of
Speaker 1: cash on the balance sheet, right it does, because if
Speaker 1: you look at the data that the Wall Street Journal has,
Speaker 1: they're saying that in the company generates significantly negative even
Speaker 1: of margins, so it's not generating new profit, so it's
Speaker 1: just draining the cash that is buying this beautiful. I mean,
Speaker 1: are long only institutional retirement you know widow portfolios buying
Speaker 1: Uber at seven percent coupon? Well that it is a
Speaker 1: private placement, so I hope it's not because there's no
Speaker 1: liquidity in the bonds. Once you have a private placement,
Speaker 1: it becomes a much tougher issue to to trade, which
Speaker 1: actually makes things like Tesla, which the bond is fifteen
Speaker 1: points below its initial pricing, UH, much more interesting, which
Speaker 1: also yields the same yield as the as the Uber bond.
Speaker 1: What does Suber look like a night? Yes? And would
Speaker 1: you be willing to hold a night yet? Now through
Speaker 1: to maturity? But with ye Seriously, the point here, Joel,
Speaker 1: this is a great conversation is it's a private transaction.
Speaker 1: That's the really. I mean, how many people will buy
Speaker 1: this piece? Is it like for people for sovereign wealth funds? Well,
Speaker 1: it's oversubscribed, so somebody's buying it. I just you know, again,
Speaker 1: if I go back to my history, UH, portfolio manager
Speaker 1: that I worked with said, if you're not getting paid
Speaker 1: to take the risk, why are you doing it? And
Speaker 1: it feels like there's a lot of risks here in
Speaker 1: terms of lack of disclosure, lack of liquidity, UM, lack
Speaker 1: of cash flow, and they've the company has said that
Speaker 1: it's not gonna be profitable for three years. Critically, in
Speaker 1: the bond perspectives, do they see the financials that I
Speaker 1: don't know? Because it's not it's not, we don't know.
Speaker 1: That's that's one of the reasons I think you take
Speaker 1: the you take the bond offering private because it's a
Speaker 1: a limited pool of investors, and I guess the finances
Speaker 1: are in a limited set of hands Joe as well.
Speaker 1: In theory that will be disclosed next year, right because
Speaker 1: Uber has to go public next year or otherwise. I
Speaker 1: believe a bunch of investors on the equity side have
Speaker 1: the option of cashing out on from the soft bank
Speaker 1: venture fund. Interesting. So here's the other interesting thing for me,
Speaker 1: walk us through covenant light and how much of an
Speaker 1: issue this is in fixed income right now. I'm talking
Speaker 1: about the quality of the debt that come to the market,
Speaker 1: the covenants that used to be attached to it and
Speaker 1: are no longer attached to it. Sure well, covenant are
Speaker 1: are never an issue until there's an issue, And unfortunately
Speaker 1: that's the way the market works. And what happens, is
Speaker 1: John Tucker, which marriage was he describing? There, take your pick,
Speaker 1: you got six? Did you join covenance to like the
Speaker 1: pre nup? Like the pre nups if the marriage. If
Speaker 1: the marriage doesn't go well, you can basically say you
Speaker 1: can have one of the covenants can be say the house.
Speaker 1: Or if the marriage doesn't go so well, you can
Speaker 1: basically say to them stop spending in the shops. When
Speaker 1: you start to get rid of those covenants, the agreement
Speaker 1: you have with the issue a little bit light. The
Speaker 1: only thing I would say, John, is with my covenants
Speaker 1: and I've been married for fifteen years, they never get amended,
Speaker 1: even even pretty tough covenant um. But you know the
Speaker 1: problem is with the with deals that are getting done
Speaker 1: today is that it's being done at a topy kind
Speaker 1: of part of the cycle, and so they're being done
Speaker 1: with light covenants, meaning a lot of room and capacity.
Speaker 1: And when the market turns down, those are the bond
Speaker 1: holders are gonna get that the hardest. First, is there
Speaker 1: a bet with a a private placement that they go
Speaker 1: to a premium if they come at par one hundred,
Speaker 1: that they trade positive or in a private placement, is
Speaker 1: there even price discovery one week, one quarter, one year on.
Speaker 1: It's pretty limited. Um. You know, when you have these
Speaker 1: darker markets, like a structured finance or a private placement,
Speaker 1: you wind up using third party data. Now, luckily here
Speaker 1: at Bloomberg we can use a b val curve or
Speaker 1: something to price and saying this is what you see
Speaker 1: how he gets the product place. Michael Bard doesn't do that.
Speaker 1: Did you do a b vail curve today? No? I
Speaker 1: did not. What is a b vail curve? Please be sure.
Speaker 1: We have curves here at Bloomberg which can show you
Speaker 1: add different readings what a bun should be praised at
Speaker 1: um and so you could use something like that to
Speaker 1: help you discover it. But you really never know because
Speaker 1: there's not a public market where you could just go
Speaker 1: and trade. Can you come back and be the official
Speaker 1: surveillance marriage counselor? I mean the idea that you've been
Speaker 1: married fifteen years is wonderfu We say, good morning, Mrs Levinson.
Speaker 1: It's really cool. I think that's what my career has
Speaker 1: been meant for. Okay, very good Our marriage counselor Joel
Speaker 1: Levinson with us this morning. Busy day for Primister May
Speaker 1: and Brussels today she'll be meeting with the EU Council
Speaker 1: President Donald Tusk. Then later this evening she'll addressed the
Speaker 1: blocks twenty seven leaders, who will then convene over dinner
Speaker 1: without her. Honestly, the way politics work in Brussels. Don't
Speaker 1: you love that? And our guests will explain that. Yeah,
Speaker 1: our guest is going to explain that. Now, the thoughtful
Speaker 1: and always outspoken Wolfgang mun Show. You wrote intelligence President Wolfgang,
Speaker 1: what is going on in Europe today? And how do
Speaker 1: you explain this process to people? Yeah, it's hard to
Speaker 1: explain European processes through people in in general. The reason
Speaker 1: the reason they're having dinner among themselves, it is because
Speaker 1: they need to they need to agree their own negotiating position. Now,
Speaker 1: we're not going to get any big breakthroughs on Brexit.
Speaker 1: The whole thing is stalled, but there is a is
Speaker 1: a ray of hope and at least they want to
Speaker 1: avoid this kind of disaster they had at the most
Speaker 1: recent summit in in in the Austrian city of Walsburg,
Speaker 1: where everyone left went home angry and and and resentful
Speaker 1: of each other. So so the purpose of this meeting
Speaker 1: is simply to get it over with and have another
Speaker 1: one in November and December. I think there's a possibility
Speaker 1: that they might agree a deal in December. But the
Speaker 1: main purpose today is for everyone really to shut up
Speaker 1: who shapes the policy of the because it seems to
Speaker 1: me we have a good cop in Chancellor Merkell and
Speaker 1: a bad cop in Mr Macron. How do they reconcile
Speaker 1: their differences with the seven um In the end, my
Speaker 1: my hunches that meant the Marcro position will prevail because
Speaker 1: it isn't It isn't fundamentally a German position. It is
Speaker 1: also German position in Germany is a massive exporter, It
Speaker 1: has a trade circlus with the UK of fifty billion
Speaker 1: a year. Hundreds of thousands of jobs would be at
Speaker 1: stake if the UK were to drop out of the
Speaker 1: EU without a deal. Um people are not making enough
Speaker 1: of this. This is a really important factor that drives
Speaker 1: the German position, but also the Dutch position and the
Speaker 1: position of the Nordic Member states. France has different interests,
Speaker 1: but but but a no deal Brexit would be an
Speaker 1: absolute disaster for Ireland and the EU. Ultimately, you know
Speaker 1: speaks here with the majority voice. Mccona has no no
Speaker 1: veto on this and while France and Germany want to
Speaker 1: do you know, act together, there's no no, no, no
Speaker 1: need at this stage for a device for a division um.
Speaker 1: There is a clear, a clear indication that they will compromise.
Speaker 1: And this whole readiness to compromise it's new. That wasn't
Speaker 1: there a month ago when they basically indicated they would
Speaker 1: now have saying about you know, we're going to extend
Speaker 1: the transitional period. Now they won't compromise on the Irish PACTO.
Speaker 1: There will be an Irish pact stop. They can't just
Speaker 1: say or forget about this, but you know there will be,
Speaker 1: there will be, there will they will at least make
Speaker 1: an effort to make it possible for the British to
Speaker 1: say with a straight face, this is a reasonably good deal.
Speaker 1: You invented a huge part of business journalism with your
Speaker 1: work with the Financial Time stots Land. For years I
Speaker 1: still lament the idea of them ceasing publication. I believe
Speaker 1: it was two thousand twelve. You are one of our
Speaker 1: great experts on your Germany, your thoughts on the Verian
Speaker 1: election where I observed a piece of Germany going to
Speaker 1: the far right. You know a lot of other people
Speaker 1: and an uproar going to the far left or to
Speaker 1: the green left. Is it a barbelled Germany. It's getting there,
Speaker 1: It's it's definitely getting there. But if you look at
Speaker 1: the extra number of voters, the CSU, which is the
Speaker 1: party that has been governing Bavaria pretty much forever um
Speaker 1: the CDs, you didn't lose that many votes. It was
Speaker 1: not a great result that the percentage was down by
Speaker 1: about ten but there were there were at about forty
Speaker 1: seven and they're now at at about thirty seven percent.
Speaker 1: Not great in terms of you know, what they had
Speaker 1: five years ago, but they hang on to most of
Speaker 1: their voters. The whole participation in the in the election
Speaker 1: went up quite a lot. They hang on to most
Speaker 1: of their voters. The party that really lost there were
Speaker 1: the Social Democrats. Now they used to be the main
Speaker 1: opposition party. Now they're down to nine percent of the votes.
Speaker 1: They kind of collapse, and the Social Democrats also collapsed
Speaker 1: in the Netherlands and other European Italy, in other European countries.
Speaker 1: That's pretty much the main story of that. And you know,
Speaker 1: if you look at the combined vote of the left,
Speaker 1: the three parties of the left, they haven't changed. It's
Speaker 1: just that the Democrats are collapsing and the Koreans are gaining.
Speaker 1: That's been the main, the main effect, and interesting, the
Speaker 1: awesome Bavaria. You have the a f D, which is
Speaker 1: the far right party, a very far right party with
Speaker 1: some some real fascist leanings. They got about just a
Speaker 1: little over ten percent, and they're not as strong there
Speaker 1: as they are Space Wolf. You know, we're out of time.
Speaker 1: John Farrell's living. We're out of time because this is
Speaker 1: a spirit discussion. One word answer, please, who lasts longer?
Speaker 1: Prime Minister, County or Chancellor Mercle. I would think Quanti
Speaker 1: would last longer. That's amazing, Wolf cambo Chow, you're intelligent politics.
Speaker 1: We need to get him back on that writing for
Speaker 1: the Financial Times and of course a lot of other
Speaker 1: important duties from Germany to London, Wolfgang Man Show. Thanks
Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen
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Speaker 1: you prefer. I'm on Twitter at Tom Keene before the podcast.
Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio